Life Insurance Facts: Debunking the Myths

 As you explore your life insurance options, understanding fact from fiction can help you determine the coverage that is right for your needs and goals. 

Perhaps you’ve heard that you don’t need life insurance, that it’s too expensive, or that you may not qualify. These are just some myths that may prevent people from getting the coverage they need to help protect the ones they love. By understanding the facts, you can get a clearer picture of what can help during challenging times. 

Understanding these five common life insurance myths and facts can help guide your decision on the right life insurance for you. 

In this article:

1. Myth: Employer-provided life insurance is enough

2. Myth: Life insurance is too expensive

3. Myth: It's better to invest in the stock market

4. Myth: You don’t need life insurance if your children are grown

5. Myth: Life insurance is only for the elderly or sick

Life insurance fun facts you didn’t know

How to separate life insurance facts from myths 

Understand life insurance facts for your financial security

Frequently Asked Questions (FAQs)

1. Myth: Employer-provided life insurance is enough 

While life insurance is a nice employer benefit, the policy type and amount of coverage may not be the best fit, and you may not be able to keep it long-term if you change jobs. 

• Death benefit amount. You choose a death benefit amount that meets your family’s needs rather than the amount your employer offers.

• Type of policy. You choose a term to cover temporary needs or a permanent policy with life long coverage to aid in financial planning.

• Term length. You decide on the length of time your policy lasts, as your employer plan may not be portable when you leave the company.

• Customization. You choose policies and riders to customize your coverage to your exact needs.

According to the Bureau of Labor Statistics, people of the baby boomer generation (born from 1957 to 1964) changed jobs nearly 13 times from the time they became adults until they were 58.¹ When you purchase your own policy, your family’s protection remains in force even if you change jobs. 

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2. Myth: Life insurance is too expensive

A common life insurance myth is that life insurance is unaffordable. It can be easy to misunderstand the factors that go into rating life policies, and some may confuse the higher cost of a permanent policy with the affordability of a term policy. 

Budget-friendly policies are available for nearly everyone. For example: 

• Term policies offer a fixed premium and death benefit that lasts for a specific number of years.

• Guaranteed issue policies are whole life policies for people aged 45 to 85 (50 to 75 in NY), and they don’t require a medical exam.

A term or whole life policy locks in your life insurance cost, making it easier to budget. Rates are generally lower for young, healthy people. Save even more by asking about premium discounts or other discounts, such as paying in full. 

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3. Myth: It's better to invest in the stock market

You don't have to choose between life insurance and investing. Some life insurance policies offer lifelong protection and also have an investment component. 

• Guaranteed financial protection: Some policies have a guaranteed death benefit regardless of stock market downturns.

• Tax-free payouts: With a few exceptions, death benefits are generally paid to your beneficiaries on a tax-free basis.

• Stability: Stock markets fluctuate, and some life insurance policies are structured to limit the impact of market downturns through crediting features like interest floors, while also limiting upside potential through caps.

Many people find that it's best to purchase life insurance in addition to investing in the stock market, especially when their goals are protection and stability. 

4. Myth: You don’t need life insurance if your children are grown

Life insurance may be essential for some parents, and the need for life insurance may not end after the kids are grown. 

Here are some common reasons parents with adult children may need life insurance: 

• Help protect co-signers. To prevent a student loan, mortgage, medical debt, or other debt from passing on to the co-signer

• Help pay off a mortgage. To give loved ones time to decide whether to sell your home, rent it out, or transfer the deed

• Help pay for final expenses. To provide funds for a funeral, cremation, burial, or celebration of life service

• Legacy planning. To leave money to a family member, partner, or a charity

Overall, life insurance for parents helps protect those you love from your debts and final expenses. 

Final Expense Calculator

5. Myth: Life insurance is only for the elderly or sick

While life insurance can be important for the elderly and people who are ill, it can also be valuable at each stage of life. 

The best time to get life insurance is as soon as you have a loved one who depends on you financially, or when you don’t want to burden your family with debt if you pass away. 

• For younger people. Premiums are lower, and you can lock them in while you are still healthy.

• For older people. Life insurance for people over 65 typically helps with retirement savings, estate planning, and final expenses.

As your life changes, you can adjust your coverage to match your evolving responsibilities. 

Overall, life insurance can provide some peace of mind and financial stability throughout your life. 

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Life insurance fun facts you didn’t know 

Life insurance is important, but it doesn't always have to be serious. Here are some fun facts and surprising statistics about life insurance you might not know. 

• A mystery Silicon Valley billionaire took out a 201-million-dollar life insurance policy in 2014, breaking the previous record of 100 million in 1990.⁽³⁾⁽⁴⁾

• Early insurers literally wrote their names under specific risks in shipping contracts to take responsibility for the risks, which is where we get the term underwriter.⁽⁵⁾

• Some types of life insurance, like permanent life insurance, build cash value you can use while living. (And while you can take loans against your cash value and withdraw funds, doing so will decrease the policy’s death benefit.)

• In most cases, beneficiaries don’t have to pay taxes.

• You can name individuals, legal entities, or charities as beneficiaries.

Historical roots in life insurance 

Dating back for many centuries, life insurance evolved in various times and cultures out of a need to pay funeral expenses and support the families of wage earners, as these historical life insurance facts show. 

Life insurance in the Code of Hammurabi 

The earliest known insurance principles were written in the Code of Hammurabi around 1750 B.C., in honor of the king Hammurabi. The code included 282 laws related to public life, citizens’ rights, and justice. They were written on a stone stele and on other clay tablets. The stele is on display at the Louvre Museum in Paris.⁽⁶⁾

Life insurance existed in Ancient Rome 

Roman soldiers formed “burial clubs” in which members paid dues so that funeral expenses would be covered if they died. Historians widely regard this as one of the earliest forms of life insurance.⁽⁷⁾ 

Astronaut Life Insurance 

Due to the risk of being an astronaut, it was difficult to find adequate life insurance. 

Before the first moon landing in 1969, Apollo 11 astronauts Neil Armstrong, Buzz Aldrin, and Michael Collins signed autographs on NASA commemorative envelopes. They were postmarked on launch day or moon landing day to increase their value as collectibles, so their families could generate income to cover their living expenses if they didn't return home. 

It wasn’t closely documented by NASA, but they are reported to have signed between 500 and 1000 envelopes.⁽⁸⁾ 

How to separate life insurance facts from myths 

Separating the facts from the myths about life insurance can help you better understand what you need for your current life goals. Take the time to research your options and give the process the due diligence it deserves when shopping for life insurance. 

Tips for understanding the truth about life insurance 

A well-informed approach to buying life insurance starts with understanding your options, comparing providers, and focusing on meaningful protection. 

• Policy types: Learn the differences between term and permanent life insurance.

• Compare: Get multiple quotes from various companies.

• Focus on coverage: Consider coverage first and price second.

• Policy details: Understand the exclusions, terms, and limitations.

Compare Life Insurance Types

Understand life insurance facts for your financial security 

Life insurance can be valuable to most people of every age, no matter the stage of life. It may also be more affordable than some people think. Separating life insurance myths from facts can help you understand what to look for in a life policy. United of Omaha Life Insurance Company, a Mutual of Omaha company, offers many types of life insurance to suit your needs. 

If you still have questions, contact an insurance agent or producer for more information. 

Frequently Asked Questions (FAQs) 

How can I know if I’m getting the right life insurance? 

The right life insurance policy should align with your financial responsibilities, income needs, and long-term goals. Review your policy annually, so you can make adjustments as life changes. 

Is life insurance really worth it for young people? 

Yes. Life insurance can cost less when you’re young and healthy. Policies are available that allow you to lock in a low rate for the policy term or for your lifetime. 

Can I buy more than one life insurance policy? 

Yes. You may want more than one life insurance policy to cover short- or long-term needs. Term policies can provide temporary coverage to pay debts such as your mortgage. You may also want a permanent life policy that offers lifelong coverage. 

Sources 

1. Bureau of Labor Statistics, Number of Jobs, Labor Market Experience, Marital Status, and Health for Those Born 1957-1964, August 26, 2025.

2. LIMRA, Adults Age 30 and Younger Overestimate Life Insurance Cost by 10-12 Times, June 25, 2025.

3. Guinness Book of World Records, Mystery Billionaire Takes Out Historic $201 Million Life Insurance Policy, 2026.

4. The Associated Press, Silicon Valley Billionaire Buys Record Life Policy, 2026.

5. Investopedia, Evolution of Insurance: From Ancient Practices to Modern Policies, February 21, 2026. 

6. Risk Engineering, Insurance and Risk: Some History, November 11, 2025.

7. Wikipedia, Roman Funerary Practices, November 27, 2025.

8. Wikipedia, Apollo Insurance Covers, February 25, 2026.